Franchisors Report Record Confidence in General Business Conditions

Click here for the full January 2014 report

KEY HIGHLIGHTS

• Responding Franchisors and Service Providers sentiment is extremely positive and remains elevated across many key growth drivers.
  
  
• Franchisors sentiment toward general business conditions is high and comparable to other general business confidence surveys (i.e. ANZ, BNZ and NZIER).
  
  
• Franchisors remain positive about franchisee profitability levels – arguably franchising’s most important key performance indicator.
  
  
• Franchisors sentiment for franchisor growth also remained very high, however sentiment for both access to suitable staff and locations showed a decreased lack of confidence.

The Franchize Consultants’ January 2014 Franchising Confidence Index demonstrates a further increase in a general trend towards improved confidence across overall sector growth drivers.

• The latest results indicated very positive franchisor (net 79%) and Service Provider (net 87%) sentiment toward general business conditions. These results were shared by the latest results of other more general business surveys including the BNZ (net 68% in January), ANZ Business Outlook (64% in December) and NZIER (52% in December) business confidence surveys.
  
  
• Both franchisors (net 62%) and Service Providers (net 93%) were positive about prospects for franchisor growth. This is a marked increase from the already positive results in the previous quarter of net 50% and net 79%, respectively.
  
  
• Franchisors sentiment toward access to financing dropped from a positive 9% to 0%, Service Providers are slightly more positive than franchisors at a net 14%.
  
  
• Franchisor sentiment toward access to suitable franchisees increased this quarter, from negative net 13%, to a neutral 0%.  Service Providers, meanwhile, were notably more optimistic at a net 47%.
  
  
• Confidence in access to suitable staff decreased. Franchisor sentiment dropped from net 9% to net 3%.  Service Providers also decreased from net 29% to 13%.
  
  
• Franchisor sentiment towards access to suitable locations dropped from net 19% to 0%.  Service Providers were more positive at net 40%.

• Franchisor and Service Provider sentiment towards future franchisee sales levels remained at a high level. Franchisors’ at a net 65%. Service Providers up to a net 80%, up from net 50% in the last quarter.
  
  
• Franchisor confidence in franchisee operating costs remained negative during this quarter at a net negative 18%.  Service Provider sentiment was a net negative 40%, decreasing from negative net 7% from the last quarter.
  
  
• Sentiment toward future franchisee profitability remained positive overall. Franchisors reported a net 19%, and Service Providers a net 36%.

Overall, Franchize Consultants’ Franchising Confidence Index in January 2014 demonstrated a further increase of the generally high levels of sentiment recorded in the previous quarter.  This positive sentiment was shared by other recent general business confidence surveys and is reflective of a generally improved outlook and forecast for the economy, with business confidence levels at a 20 year high.

Franchisors continue to maintain a very positive outlook for general business conditions, sales levels per franchisee, with franchisor growth prospects nearly at record levels for this Index.  Key franchisor identified challenges for growth in 2014 included finding franchisees, potential economic factors, franchisee complacency and finding suitable locations and staff.

The sentiment contained within the results indicate 2014 could be a very strong year for franchising in New Zealand.

For a copy of the full report visit: www.franchisingconfidence.co.nz

Franchising Confidence Index Background

Franchize Consultants’ Franchising Confidence Index is a quarterly survey of circa 400 New Zealand franchisors and 100 specialist service providers (e.g., consultants, banks, accountants, lawyers and publishers) to the franchising community.

The Franchising Confidence Index represents confidence in key measures critical to the success of franchising in this country by reporting attitudes toward general business conditions, as well as key franchising growth determinants including access to capital, suitable potential franchisees, staff and locations. The Franchising Confidence Index also covers franchising health attributes and outcomes by exploring franchisee sales, operating costs and profitability, and franchise system growth prospects.

The data and analysis presented represents the views of 35 franchisors and 15 Service Providers collected between Monday 27^th January and Friday 31^st January 2014. Findings from both groups are reported separately.  Respondents were asked whether they expected conditions to be ‘better,’ ‘same’ or ‘worse.’ ‘Net’ confidence is the difference between those reporting ‘better’ and ‘worse.’